Castledine Gregory Law and Mediation

Scaffidi decision clarifies gift disclosure requirements

Content

The Supreme Court decision in Scaffidi v Chief Executive Officer, Department of Local Government and Communities [2017] WASCA 222 provides clarification on what constitutes gifts and travel contributions required to be disclosed under the Local Government Act 1995 (WA).

 

Part 5 of the Local Government Act 1995 (WA) provides that a council member must disclose each gift received by the person. A ‘gift’ is defined as a benefit provided ‘without consideration in money or money’s worth passing’ from the gift recipient. Additionally, council members must disclose each financial or other contribution that has been made to any travel undertaken by that council member – but not where the contribution was made in the ordinary course of the occupation of the person which is not related to their as a council member.

 

The essential findings of the Court’s decision can be summarised as follows:

  • Consideration for gifts is not limited to things that can ‘bought or sold in an open market at an objective and predictable price’. It is broad, including speeches and attendances at meetings.
  • ‘Financial benefit’ must look to the substantive effect of the transaction. The need for accountability only arises where a substantial financial benefit is provided as this may influence a council member.
  • ‘Occupation’ in the Local Government Act 1995 (WA) is not a high threshold. An ‘occupation’ does not have to generate an income, nor does it require continuous service.

 

Background

 

The Chief Executive Officer of the Department of Local Government and Communities (respondent) alleged that the Lord Mayor of the City of Perth, Lisa Scaffidi (applicant), committed 45 serious breaches of the Local Government Act 1995 (WA) (the Act).

 

Breach 1 alleged a failure by the applicant to lodge her 2008/2009 annual return by 31 August 2009. The applicant admitted this breach.

 

Breaches 2 – 29 alleged a failure to disclose gifts in respect of each return period from 2007/2008 to 2013/2014 (excluding 2009/2010). Three breaches were admitted and the remainder were denied.

 

Breaches 30 – 45 alleged that the applicant failed to disclose contributions to travel in respect of each return period from 2007/2008 to 2013/2014. One breach was admitted and the remainder were denied.

 

The matter was heard in the State Administrative Tribunal who found the applicant had committed all alleged breaches. The applicant appealed this decision to the Supreme Court primarily on the basis that various contributions to travel and accommodation by third parties were not ‘gifts’: the applicant either performed something in exchange for the accommodation to provide consideration, the accommodation was part of her occupation not related to her duties as a council member, and/or she did not receive any financial benefit.

 

Decision

 

The Court found that the Tribunal had made an error by accepting the respondent’s definition of ‘gift’ where something is only consideration if it could be ‘bought or sold in an open market at an objective and predictable price. The Court also rejected the submission that ‘a construction [of the Act] which promotes accountability and transparency is to be preferred to one that does not promote those objects’. As a result the Tribunal wrongly held that the activities relied on by the applicant (speeches, etc.) was not consideration and the relevant accommodation and travel expenses were therefore gifts.

 

The Court found the Tribunal made an error in finding that an entitlement to reimbursement is irrelevant to the question of whether the provision of accommodation by a third party conferred a financial benefit on the applicant. The Court stated that the concept of financial benefit must look to the substantive, not the formal, effect of the transaction. Where the applicant can claim a reimbursement from the local government, payment of that reimbursement by a third party does not make the applicant any better or worse off. The Court found the need for accountability only arises where a substantial financial benefit is provided. Actions that do not substantively improve a council member’s financial position are unlikely to influence the member to decide matters other than on their merits.

 

The Court found that the Tribunal made an error in finding that ‘occupation’ meant only activities for which an income is earned and that an occupation must be continuous.

 

Result

 

The appeal was allowed and breaches 2 – 4, 7 – 9, 11, 13 – 26, 28 – 31 and 41 were dismissed.

 

The effect of the decision is that contributions to travel and accommodation costs for councillors may not need to be disclosed in circumstances where the elected member is making speeches or attending meetings as part of the arrangement, would be entitled to reimbursement from the local government for the same costs (if applied for), or was engaging in the activities as part of their ‘occupation’ in a broad sense.

 

For further information, please contact Graham Castledine.

 

Disclaimer: The information contained in this update is not advice and should not be relied upon as legal advice. Castledine Gregory recommends that if you have a matter in relation to which legal advice is required, you consult with your legal adviser.

 

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